Summary
The drug market in the United Arab Emirates is displaying strong growth and BMI forecasts that it will reach valuation of US$1.7bn by 2011, driven by the country's rapidly expanding population, sector modernisation and growing foreign direct investment (FDI). The expansion of the health insurance sector, which has now entered its second phase in Abu Dhabi and the gradual shift of health spending to the private sector will also underpin long-term growth. However, as BMI's recently released United Arab Emirates Pharmaceuticals & Healthcare Report Q1 2007 cautions, government cost-containment measures, such as further price cuts and the continual promotion of low-cost generics, could have a deflationary impact on pharmaceutical expenditure. What is more, the fortunes of the UAE, like most economies in the GCC, is tied closely to the oil industry, and a fall in prices could have a knock-on effect in areas such as healthcare, which have recently benefited from generous state investment. Although traditionally viewed as somewhat of a backwater in terms of pharmaceutical regulation, the Middle East and North Africa (MENA) region has caught up quickly over the past decade. Leading the way are the Gulf Co-operation Council countries, which is why they take leading positions in BMI's Business Environment Ranking. Oman and Bahrain have both recently signed free trade agreements (FTAs) with the US, which means they have implemented international standard intellectual property (IP) regimes.
The UAE, which is in the top spot, has worked hard to bring its IP structures up to date and as is now reaping the benefits in terms of increased foreign investment. Strong forecasts of market growth and a stable political and economic climate are also having a positive impact. It is hoped that such improvements will help attract investment, especially in high growth areas such as biotechnology. Developments such as DuBiotech will be vital in securing R&D investment and will go some way to helping make the UAE a hub for life sciences in the region. In what could prove a landmark deal for the region, local player Neopharma has recently agreed to set a joint venture with Biocon, India's leading biotechnology firm. This industry is worth around US$460bn globally, and by 2009 should reach US$625bn, when it will account for more than half the drugs available on the market. Biotech should continue to become more global as companies, particularly in the US, look to the emerging markets for their manufacturing needs and to conduct clinical trials. But our most promising tip for the near future is the emergence of biosimilars, which are poised to revolutionise the pharmaceutical industry.
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